Microeconomic Analysis
Lecture 1. Introduction
EC101 DD & EE / Manove Introduction
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Announcements
Check the course website frequently:
http://sites.bu.edu/manove-ec101/
Discussion Sections begin Tuesday, Sept 13.
Please don’t be late for class.
EC101 DD starts promptly at 11:00 am.
EC101 EE starts promptly at 2:00 pm.
EC101 DD & EE / Manove Introduction>Announcements
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Final Exams:
Lecture DD, Dec 20 at 12:30-2:30 pm
Lecture EE, Dec 17 at 3:00-5:00 pm
Get your air tickets soon, but DO NOT PLAN TO
LEAVE before you take your final exam.
If you do not take your final exam as scheduled,
you automatically fail the course.*
“My mother bought my air ticket without telling me!”
This is not a valid excuse.
*I sometimes allow DD students who are traveling outside
the country to take the final on Dec 17 with the EE lecture.
For permission, you must email me and explain the reasons.
EC101 DD & EE / Manove Introduction>Announcements
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Course Staff
Instructor: Michael Manove
We teach EC101 DD and EE in parallel.
Lectures on the same day will be similar.
But you must attend your own lecture.
My Office Hours: T 5:15−6:15 pm, F 10 −12 noon.
Head Teaching Fellow for
DD and EE: Juan Carvajal
Juan will give me and the other TFs
feedback on our teaching.
EC101 DD & EE / Manove Introduction>Course Staff
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TFs & Discussion Sections
Teaching Fellows:
Fatima Aqeel
[D8, E2, E7]
Undral Byambadalai
[D9, E8, E9]
Juan Carvajal
[D1, D5]
Thea How
[D7, E1, E3]
EC101 DD & EE / Manove Introduction>Course Staff
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TFs & Discussion Sections [Cont’d]
Teaching Fellows:
Maggie Neely
[D2, D4, D6]
Petra Niedermayerova
[D3, E0, E6]
Luke Zinnen
[E4, E5]
TA Office Hours
will be listed on the
course website.
You are required to know your Discussion Section
number and the first name of your TF.
EC101 DD & EE / Manove Introduction>Course Staff
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How to get an A in EC101
EC101 DD & EE / Manove Introduction>How to get an A
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 NEVER MISS CLASS!
 Keep up with readings and problems.
 Get help when things go wrong.
EC101 DD & EE / Manove Introduction>How to get an A
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Also:
EC101 DD & EE / Manove Introduction>How to get an A
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Your clicker or smartphone app:
Students will be required to have a clicker,
Turning RF-LCD, or a ResponseWare
smartphone app starting on Sept 20…
…but if you already have a clicker or app take out
your device for a demonstration.
Log into your app and enter session DDEE.
Set your clicker to Channel 41.
Press Channel, then 4, then 1, then Channel.
Never press Channel unless you are changing the
channel. The clicker is always turned on.
After you buy your clicker or app, register it online.
On the course website go to
Classes>Clicker Registration.
EC101 DD & EE / Manove Introduction>Clicker
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EC101 DD & EE / Manove Clicker Question
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Economists
If you don’t have a medical degree, and you
call yourself a “doctor” and
treat patients,…
you will be arrested for “practicing
medicine without a license.”
But anyone can legally call himself
an “economist”…
…and discuss the economy on TV.
EC101 DD & EE / Manove Introduction > Economists
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Thinking like an economist
Bricklayers, baseball players and bartenders
have a special way of thinking about the
world.
So do economists.
Economic thinking helps us see things that
other people might miss.
We believe that economic thinking is often
useful in decision-making.
Here are some basic principles of economic
thinking.
EC101 DD & EE / Manove Introduction>Thinking
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1. Think about goods (not money)
Example: Monday, August 24, 2015
Stock markets crashed
all over the world.
Within three days,
$3000 billion of market
value worldwide
seemed to disappear.
Where did it go?
 Did societies become $3000 billion poorer
because of these stock-market crashes?
EC101 DD & EE / Manove Introduction>Thinking>Goods Not Money
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Let’s look at the goods:
Did factories disappear on August 24, 2015?
Did the CEO’s desk vanish from under his
nose?
Did TV’s on the shelves of appliance stores
dissolve into thin air?
EC101 DD & EE / Manove Introduction>Thinking>Goods Not Money
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By following the goods, we see that the
material wealth of society did not change!
But investors revised their beliefs about its
value—downwards.
This is bad for sellers of assets (like houses),
…but it may be good for buyers of assets,
who can now get them for cheap.
Effects on the future production of goods
and services???
EC101 DD & EE / Manove Introduction>Thinking>Goods Not Money
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2. Almost everything has a cost.
Because time and other resources are scarce
(limited),…
…you have to sacrifice something to get
something else.
Economists call the required sacrifice the cost or
the opportunity cost of what you get.
Example: The cost of an A on an econ exam?
EC101 DD & EE / Manove Introduction>Thinking>Cost
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Opportunity Cost: More Examples
Do you want to buy an Alpha Romeo?
EC101 DD & EE / Manove Introduction>Thinking>Opportunity Cost
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Do you want to get an A in Economics?
EC101 DD & EE / Manove Introduction>Thinking>Opportunity Cost
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EC101 DD & EE / Manove Clicker Question
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3. People respond to incentives—
sometimes in unexpected ways.
Example: Protecting the Elderly
A law prohibits eviction of the elderly for not
paying the rent.
How would the law affect housing for the
elderly?
This law would make it more difficult to collect
rent from the elderly,…
so …
EC101 DD & EE / Manove Introduction>Thinking>Incentives>Protecting Elderly
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Example: Protecting trees.
Suppose the U.S. Congress passes a tough
law that limits the use of paper.
What would happen to the number of trees?
EC101 DD & EE / Manove Introduction>Thinking>Incentives>Protecting Trees
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If Congress passed a tough law that limits the
use of paper, how would the law affect the
number of trees?
EC101 DD & EE / Manove Clicker Question
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Suppose Congress made it illegal to eat chicken
or eggs. What would happen to the number of
chickens?
EC101 DD & EE / Manove Introduction>Thinking>Incentives>Protecting Chickens
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Trees and Chickens
 Are trees used for paper similar to chickens used
for food?
 If people stopped using paper, would there be
more farmed trees?
more wild trees?
Conclusion: If people use less paper, we would
probably have …
….
EC101 DD & EE / Manove Introduction>Thinking>Incentives>Trees and Chickens
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End of File
EC101 DD & EE / Manove End of File
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